Market trends come and go but "boring" ASX shares often win out, according to Atlas Funds Management founder Huge Dive.
The fundie – responsible for a portfolio that outperformed the S&P/ASX 200 Index (ASX: XJO) by 7.6% over the 12 months to June – told the Australian Financial Review (AFR) 'trendy' sectors often don't compete with market staples in the long term.
So, which old-school ASX shares appear to have caught Dive's eye recently? Keep reading to find out.
Old economy ASX shares > new school stocks: fundie
Dive is a dotcom bubble veteran, and his learnings from the disastrous early-2000s market crash saw him avoiding the recent buy now, pay later (BNPL) rally.
"We massively underperformed in that 1999-2000 era by focusing on boring industrial companies," Dive told the AFR. "But when the market eventually crashed, it was those companies … that ended up doing very well."
That experience has led him to focus on "old economy" stocks today. Dive said, courtesy of the AFR:
In mid-2020, if you were Jeff Bezos, you could've bought the entire ASX BNPL sector for $22 billion for an expected loss of $159 million in the following year.
For roughly the same amount, an investor could own the largest packing manufacturer in the world … one of the most efficient electrical goods retailers on earth … and the power distribution systems in South Australia and Victoria … Your expected following year profits would've been $1.8 billion.
Of course, the fundie refers to packing manufacturer Amcor CDI (ASX: AMC), electronics retailer JB Hi-Fi Limited (ASX: JBH), and electricity-focused investment company Spark Infrastructure.
The Amcor share price has surged 25% since mid-2020 while that of JB Hi-Fi has traded relatively flat.
Spark was trading at around $2.20 in mid-2020. It was snapped up in a $10.1 billion takeover – valuing the stock at $2.95 apiece – in December 2021.
Meanwhile, many of the market's former ASX BNPL favourites saw their share prices peak in February 2021.
Stock in both Zip Co Ltd (ASX: ZIP) and Sezzle Inc (ASX: SZL) tumbled more than 90% over the 12 months ended June. And their suffering intensified when the companies abandoned a long-awaited merger plan earlier this month.
The publication quoted Dive as saying:
While these three old economy stocks didn't have the blue sky and sizzle of the BNPL sector, these are also companies that have been around through a range of market conditions, good and bad.
What makes up the fundie's portfolio right now?
Dive manages the Atlas Concentrated Australian Equity Portfolio, which boasted notable ASX 200 infrastructure shares in its top active holdings last month.
Both Transurban Group (ASX: TCL) and Atlas Arteria Group (ASX: ALX) made the list. They were joined by Amcor, Ampol Ltd (ASX: ALD), and Incitec Pivot Ltd (ASX: IPL).
Meanwhile, the fundie is bullish on ASX 200 banks such as Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC), reports the AFR.
Though, Dive reportedly stays away from ASX iron ore shares, citing an "unsustainable" iron ore price.
